NICHOLAS HOLLIS

Agriculture's Enron

The Enron Scandal is casting a long shadow
across the land. As the top media story drives other worthy topics
off the agenda for public policy consideration, virtually nothing is
immune from the "Enron insight" or the "Enron angle". Recently at a
high-powered breakfast chaired by former ag secretary Clayton Yeutter
the topic was the stalemated farm legislation -- but Enron was
lurking. Lobbyist conversation turned to the latest twist in the
collapse of the Houston energy trading firm, which rose from
obscurity to become the 7th largest US corporation last
year.

Policymakers are running scared and trying
to distance themselves from the Enron "taint" but it runs deep. And
there are rumblings of another imminent meltdown among the corporate
high flyers: Archer Daniels Midland (ADM) the Supermarkup to the
World. Still controlled as a family fiefdom, ADM has outraged huge
state pension funds in Florida and California which hold millions of
shares of the company's stock, by failing to provide transparency in
accounting during the long, drawn out pricefixing scandal. ADM stock
prices nosedived from the mid 20s into the single digits, missing the
entire bull market, while unseen millions were spent to mount an
enormous legal counterattack which aimed at stalling the government
investigation and maintaining ADM's contracts with USDA (even after a
guilty plea).

These contracts including Food for Peace,
school lunches and other programs were maintained -- along with a
campaign contribution greased subsidy for a fuel additive called
"ethanol". worth hundreds of millions to ADM. Coupled with the sugar
subsidy which props up a phoney market for high fructose corn syrup
-- another major ADM product, the inquiring mind wonders if ADM could
survive without massive government subsidy -- which is rather
entangled with the larger farm subsidy issue currently before
Congress. The answer on the street is "NO".

As the current debate over farm policy makes
clear -- ADM and its phalanx of controlled ag groups, such as the
corn and soybean growers associations, farm bureau and others, DO NOT
want to break the subsidy-riddled status quo -- even as smaller
farmers and many others realize the current programs are
dysfunctional and unsustainable. These groups have managed to
infuriate the administration and the farmers by appearing
opportunistic and greedy while other Americans were willing to
tighten their belts. The White House now recognizes that behind the
facade of phoney ag association managers pressing for more subsidy --
is the Ethanol King himself. Yep, the same miserable Pied Piper, who
has practically single-handedly led American agriculture over the
cliff, while enriching himself and family with grotesque offshore
bonuses only slightly less generous than the "campaign finance" he
doles out to both sides of the political spectrum.

No one wants another tragedy to engulf the
country like Enron -- but no one has really wanted to look into ADM
either. When the pricefixing scandal first broke in mid-1995, the
Department of Justice started an investigation into multiple fraud
evidence (on tape) and allegations, but this soon dissolved under
political pressure into a bizarre, laser-beamed criminal takedown of
the government's primary informant. Key higher-ups, such as Dwayne
Andreas, received immunity as part of a $100 million plea
agreement/fine. The public is watching Ken Lay now, but the real
question may be which motorboat makes it to the Cayman Islands, or
Cuba first.

If Enron's corrupting senior management had
been confronted earlier -- even by a few braver accountants --
perhaps much of this fiasco could have been avoided. But perhaps not
when you look at all those phoney subsidiaries. In ADM's case it
might be less complicated -- and, maybe this administration will take
a "big stick" to the management in Decatur. Thus averting a crisis
while helping the farmer. Timing seems propitious, but action will be
needed soon to avert an "Enron in agriculture."

Nicholas E. Hollis is president of the
Agribusiness Council. See www.agribusinesscouncil.org or email
agenergy@aol.com.